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Some Final Words on Long-Term Care

In the last five articles on long-term care, we have defined some long-term care terms, highlighted the ways you can expect Medicare and Medicaid to pay for long-term care, explored the issue of long-term care insurance, discussed some long-term care statistics, and outlined a few alternative sources for meeting potential long-term care needs. Now it's time for some final thoughts on a topic that by now everyone must realize is quite complex. And make no mistake about it -- these brief columns barely scratch the surface of what's involved in deciding how we should handle this issue for ourselves.

If this series has stimulated your thinking and provoked some spirited family discussions on a topic many of us may prefer to avoid, then I've achieved my goal. While these articles may not enable you to reach a firm decision immediately, they should allow you to reach some general conclusions, such as:

Long-term care and nursing home care are not synonymous. Long-term care encompasses a much wider scope of services, ranging from the meeting of simple personal needs to comprehensive medical support.

Medicare pays for very little in the way of long-term care costs. Medicaid may pay many costs, but only for those who have exhausted the bulk of their personal assets.

Long-term care insurance is available, but the underwriting of those policies is still in its infancy, so premiums may undergo drastic change from the initial charge. Policy costs can be expensive, and substantial differences between policies make comparison-shopping a must.

The older you get, the more likely you'll need some type of long-term care. However, the bulk of these services will be provided outside of a nursing home. Thus, these services are less likely to be covered by insurance, Medicare, or Medicaid.

Alternatives to nursing home care that enable us to maintain a high degree of independence and private living for as long as possible do exist. These include community-based services, home care, independent living (i.e., congregate housing), assisted living facilities, and continuing-care retirement communities.

I wish I could wave my Foolish wand and satisfactorily resolve the issue for all. Sadly, I can't do that. All I can do is point to the available facts. Using those, you must then decide what seems to be the best approach for you. I've laid out the facts I thought were important, including a few that are often distorted or glossed over by providers, insurers, and others with different axes to grind. Now it's up to you to evaluate the factors involved. As you go through that process, you may want to answer the following questions:

How much will it cost and how will I pay for long-term care if and when it's needed?

How much am I willing to pay?

In the absence of family, who could and would provide such care for me?

How would my spouse's or family's standard of living be affected if I incurred long-term care expenses?

How do I comparison-shop for long-term care insurance?

How much control am I willing to give others over how, when, and where I receive long-term care services?

It's crucial that you think about and answer these questions now, not later when it may be too late. Long-term care is an emotional and potentially expensive issue to sort through at any time. Waiting to determine what you want to do about taking care of yourself until you're actually in need of such care is not a Foolish course of action. Indeed, waiting until you need such care will almost certainly result in those questions being answered for you by others. And in most cases, you won't like the answers that result from procrastination.

Arguably, the most difficult decision of all will be about long-term care insurance. Be aware that such insurance can play a vital role in defraying the overall costs of long-term care. While it may not provide a perfect solution, it can provide peace of mind. It serves a need, but you have to decide how it will do so. Just remember that the more you wish the policy to do, the more the policy will cost. Also remember that all policies are not created equal, even when they appear to be so on the surface.

Ensure that you can afford the premium cost, both at the time of purchase and later. Some experts believe that if your future income cannot absorb up to a 30% increase in future premiums, then you may be in danger of cancelling the policy just when you're approaching the years when it would be needed the most. While insurance companies may not impose arbitrary premium increases on individuals, they can and do on all insureds within the particular state of issue. More than once over the past two decades, premiums have been increased beyond the level some purchasers could afford. To avoid this event, it's wise to stick with a top insurer who is less likely to raise premiums beyond an affordable level.

Learn and understand policy-triggering points for payment of benefits, and clearly note any limitations. Ensure that the policy will pay for services provided outside of a nursing facility, and know the required triggers for such payments. Know also that the younger you are at policy purchase, the cheaper your premiums will be. Still, as discussed in an earlier article, many experts recommend delaying your purchase until age 60 or so. Also, premium costs are lower the longer the elimination period is before benefits start coming in. If cost is a major concern, go with a longer elimination period.

And don't forget the impact of inflation. You're most likely to use the protection at an advanced age, so make sure that the benefit rates and any lifetime limits increase annually by a compounded inflation rate. That way, you'll be better able to afford the costs of future long-term care services. Also, ensure your policy will pay at the same rate for home care services as it does for a nursing home. Home care can be just as expensive.

Finally, buy only from established, highly-rated companies, and then only after you compare, compare, and compare. And after you've done that, compare some more. Don't rush your decision. There are many configurations of policies, so you need to understand each competitor's product to ensure you're comparing similar policy provisions.

I urge all of you to do your research now, while you can calmly and rationally evaluate your options. If you do so today, then you and your loved ones won't have to make rushed decisions later. Those can be expensive and may even provide more care than is needed at that time. Taking a deliberate approach now will help you determine how you can best preserve your assets while providing for various levels of long-term care later. Do the necessary reading, talk with your family, and assess the alternatives. By doing so, you can decide on a course of action that takes most of the emotion out of the equation, and that will make your and your family's choices easier later.

So ends our long-term care discussion. No, we didn't reach any earth-shattering conclusions, but I hope we got everyone thinking a bit more about this issue most of us will eventually have to contend with.

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